EPA Rule Seen Finding Support at Business-Friendly Court

The U.S. Capitol Building stands past the natural gas and coal fueled Capitol Power Plant, which provides heating and cooling throughout the 23 facilities on Capitol Hill including House and Senate Office Buildings, in Washington, D.C. Photographer: Andrew Harrer/Bloomberg

June 3 (Bloomberg) -- The pro-business track record of the
U.S. Supreme Court hasn’t always extended to environmental
cases. That’s good news for supporters of President Barack
Obama’s proposed cuts in greenhouse-gas emissions.

The court under Chief Justice John Roberts has often been
quick to back business interests, supporting unlimited corporate
campaign spending and letting companies funnel disputes with
customers into arbitration.

The story is different when it comes to climate change and
the environment. It was a Supreme Court decision in 2007 that
cleared the way for the Environmental Protection Agency to
regulate carbon emissions in the first place.

The court “very clearly embraced the idea that the EPA has
regulatory authority under the Clean Air Act to deal with
greenhouse gases,” said Amanda Leiter, an environmental-law
professor at American University’s Washington College of Law.
“That at least suggests that the current court is likely to
give the agency a little bit of leeway to figure out how to
exercise that authority.”

The EPA has won a string of courtroom victories in recent
months. Most notably, the Supreme Court upheld a rule designed
to reduce pollutants that cause smog and acid rain across state
lines, and a federal appeals court backed regulations to cut
mercury and other emissions from power plants.

Boldest Step

The rule proposed yesterday is Obama’s boldest step yet on
climate change. It would slash greenhouse-gas emissions from
power plants by an average of 30 percent from 2005 levels. The
plan drew immediate opposition from Republicans and promises
that it will face courtroom challenges from states and industry.

“We see many, many legal defects,” West Virginia Attorney
General Patrick Morrisey said. “We’re now going to work
together to put a coalition in place to challenge this rule.”

The EPA is relying on a Clean Air Act provision that has
been tested in court only sparingly. The provision, known as
section 111(d), lets the agency set emissions standards for
major sources of air pollution.

The main issue with the proposed rule is that it wouldn’t
simply limit pollutants from smokestacks. Instead, it would
count emissions reductions attributable to energy-efficiency
measures, greater use of renewable energy and carbon-trading
programs. States would be given emissions targets and a menu of
options for reaching those goals.

Biggest Opening

Although the administration touts that flexibility as one
of the program’s benefits, that may also give opponents their
biggest opening to challenge the plan, says Jonathan Adler,
director of the Center for Business Law & Regulation at Case
Western Reserve University School of Law in Cleveland.

The language of the statute requires the agency to focus on
emissions from smokestacks or, at most, pollutants coming from
“inside the fence” of the facility, said Richard Faulk, an
environmental lawyer in Washington.

“The Clean Air Act is not flexible,” Faulk said. “It
says that you do these things based on point-source emissions.”

A second issue stems from an earlier administration
proposal to limit greenhouse gases from new plants under a
related provision in the Clean Air Act. A court ruling striking
down the rule for new facilities might have a domino effect:
toppling the rule for existing facilities as well.

Insulating Proposal

In crafting its rule, the EPA took steps to try to insulate
the proposal from legal challenge. The rule says that if a court
were to invalidate part of the measure -- for example, by
rejecting one of the options afforded to states for meeting the
targets -- the rest of the plan should remain intact.

The EPA has won at least six courtroom clashes over air
quality this year, with only a single setback. Five of the
victories came at the Washington-based federal appeals court
that would probably take the first look at the agency’s rules.

In the Supreme Court decision, issued in April, a 6-2
majority rejected contentions that the Clean Air Act requires
pollution reductions to be tied to the volume of a state’s
pollutants.

The EPA instead focused on the cost of reducing pollutants,
taking an approach that Justice Ruth Bader Ginsburg said in her
opinion for the court was “permissible, workable and
equitable.”

New Case

The court is scheduled to rule within a month on a less-sweeping Obama administration effort to combat climate change.
The question there is whether the EPA had authority to impose
new permitting requirements on some power plants and factories,
requiring them to install the best available pollution-control
technology.

The court’s decision in that case “may help read the tea
leaves on how much leeway particularly Justice Kennedy is likely
to give the agency in its implementation of all of its climate
change rules,” Leiter said, referring to Anthony Kennedy, the
court’s frequent swing vote.

The latest rule won’t be completed for another year,
complicating any efforts to predict the courtroom outcome. The
Supreme Court, which has four justices age 75 or older, could
have a different composition by the time a lawsuit arrives.

“I don’t even know what the Supreme Court is going to look
like by the time this gets up there,” Faulk said. That, he
added, “could be years from now.”